03/17/2022 Minutes 161 1
MINUTES OF MEETING
FLOW WAY
COMMUNITY DEVELOPMENT DISTRICT
The Regular Meeting of the Board of Directors of the Flow Way Community Development District was
held on Thursday, March 17, 2022, at 1:00 P.M. at the Esplanade Golf and Country Club, 8910 Torre
Vista Lane, Naples, FL 34119.
Present and constituting a quorum:
Zack Stamp Chairperson
Ron Miller Vice Chairperson
Martinn Winters Assistant Secretary
Bart Bhatla Assistant Secretary
Tom Kleck Assistant Secretary
Also present were:
James P. Ward District Manager
James Messick District Engineer
Greg Woods District Counsel
Audience:
Dave Boguslawski
Jim Hadder(ph)
All resident's names were not included with the minutes. If a resident did not identify
themselves or the audio file did not pick up the name, the name was not recorded in these
minutes.
PORTIONS OF THIS MEETING WERE TRANSCRIBED VERBATIM. ALL VERBATIM PORTIONS WERE
TRANSCRIBED IN ITALICS.
FIRST ORDER OF BUSINESS Call to Order/Roll Call
Chairperson Zack Stamp called the meeting to order at approximately 1:00 p.m. Roll call was conducted,
and all Members of the Board were present, with the exception of Supervisor Ron Miller, constituting a
quorum. Supervisor Miller arrived 10 minutes late.
SECOND ORDER OF BUSINESS Public Comments
Public Comments for non-agenda items (Limited to three (3) minutes). Individuals are permitted to
speak on items on the agenda during that item and will be announced by the Chairperson.
Chairperson Stamp reviewed public comment protocols. He stated due to the anticipated length of the
meeting certain Items would be taken out of order of the published Agenda. He asked District Council
to proceed with the Staff Report, District Counsel, portion of the meeting.
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Mr. Greg Woods indicated the HOA filed a revised answer in the lawsuit; the HOA did not file for a
counterclaim but appeared via an answer. He stated the HOA changed their status and were no longer
defendants. He reported under the case management plan,trial was set in the May/June trial docket; in
the case management plan, mediation had to be completed prior to trial; therefore, he was trying to
coordinate a date with Taylor Morrison in the first two weeks in April for mediation. He stated Mr.
Stamp would be a representative of the Board but would have no power to bind the Board to any
decision; a proposal would be brought to the Board during a shade session, discussed and voted upon.
He stated a couple more depositions would be done of corporate Taylor Morrison. He stated discovery
would be completed by the end of April. He stated the nonbinding arbitration was still set for April 26
and if they did not settle at mediation, and Mr.Stamp would attend the nonbinding arbitration.
Mr. Bhatla asked if the corporate persons being deposed belonged to the national Taylor Morrison
corporate office, or the Florida Taylor Morrison corporate office.
Mr. Woods responded the Board was suing Taylor Morrison Esplanade, LLC., which was the entity who
owned and owns property in the Esplanade development, as well as Taylor Morrison of Florida, Inc.,
which was Taylor Morrison's arm in the State of Florida.
Mr. Ron Miller joined the meeting via audio and indicated he was en route.
Chairperson Stamp indicated Item 6 would be discussed once Mr. Miller arrived. He stated the purpose
of today's meeting was not to adopt a budget; therefore, the consideration of Resolution 2022-3 would
be held until July when the Budget would be adopted. He asked if there were any items which would be
discussed while waiting for Mr. Miller to arrive.
Mr.Tom Kleck noted Mr.Jim Hadder wished to speak about various lake concerns.
Mr. Jim Hodder: Throughout the golf course, especially on the 16t' hole, there are unusual growths.
There are trees there that are dead and dying. They done belong in the littorals. They don't even belong
on the golf course. They are kind of in the way. I was wondering if you would consider allowing the
superintendent to remove anything that was non-littoral in fashion. I've shown pictures to Ron and Tom
Kleck, and they don't belong there. So, at no expense to the CDD, if you could authorize the
superintendent to remove those along the littoral banks, we would appreciate it.
Mr. Ward stated Mr. Hadder needed to meet with Jim Messick and if Mr. Messick approved then the
undesirable plantings could be removed. No additional Board approval was needed.
Mr.James Messick stated that they could meet while the arborist was onsite to work together.
Mr. 10:20 asked for photos and locations of the undesirable plants; he would ensure the plants
were actually undesirable nuisance plants which could be removed.
Mr. Hadder stated the Grounds Committee, of which he was a member, was in a planning state,
planning range expansion. He noted there was a section of the driving aqua range which was deemed to
be eroded and could be filled in. He stated this eroded section was on the right side of the driving range
between the range and Tee Boxes. He stated the preliminary bill to take care of the erosion would be
$39,000 dollars just to fill in and did not include the cost of building up the littoral banks. He stated it
might be advantageous to both the CDD and HOA to include this cost in next year's budget.
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Mr. Messick asked if the intent was to fill a portion of the lake which was eroded. He asked for a sketch
of what Mr. Hadder proposed to do.
Mr. Hadder displayed a photo of the area and discussed what the plans were.
Discussion ensued regarding Mr. Hadder's recommendation. Most of this conversation was
(indecipherable), no audio was picked up. There was approximately three minutes of lost audio at this
point.
Chairperson Stamp noted audio was back and asked Mr. Ron Miller to discuss Item 6 on the Agenda:
Supervisor's Request - Discussion of additional Taylor Morrison lawsuit for construction defects and
deferred maintenance.
Mr. Ron Miller thanked the Board and Chairperson Stamp. He noted the court date for the lawsuit was
fast approaching. He noted the Board had never had a discussion regarding how much money it wished
to obtain through the lawsuit. He asked if there were any possibility of having this conversation off this
record.
Mr. Woods stated the desired amount could not be discussed ahead of time; if a settlement was
proposed by the other side, the Board could then be brought into a shade session for discussion. He
stated discussing lawsuit money in a public session would create multiple problems for multiple reasons,
and from a litigation standpoint, should not be done.
Mr. Miller asked if the judge or jury would ask what the CDD wanted.
Mr. Woods responded in the affirmative; he would be making a request for a certain amount of money
based upon the testimony to date. He stated Mr. Tim Hall testified the amount of money needed to
take care of the preserves in the future was in the$3 million dollar range. He stated claims were made
for past payments in an amount close to$1 million dollars.
Mr. Miller stated he believed if Mr. Woods polled all five Board Members, Mr. Woods would receive five
different numbers. He stated $3 million dollars was just scratching the surface.
Mr. Woods stated the opinions of the Board Members did not matter in a court of law. He explained
only someone with expertise in the actual cost of the environmental cleanup could make a
determination.
Mr. Miller stated it was a matter of maintenance in perpetuity, not a matter of specific numbers. He
noted the CDD had limited investment options; funding for a $250,000-dollar annual maintenance cost
in perpetuity would not be covered by$3 million dollars.
Mr. Bhatla stated he understood the engineer would determine the operation and maintenance costs;
however, an engineer could not make the necessary funding estimate; an actuary was needed. He
noted he spoke with an actuary consultant who estimated more like $8 million to $10 million dollars
would be needed. He recommended the lawyers bring in an actuary expert.
Mr. Miller agreed.
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Chairperson Stamp noted the Corps had mentioned it would apply a 2-3% interest rate.
Mr. Winters agreed indicating the Corps said the benchmark was 2%.
Mr. Miller stated the best circumstance would be if an offer were received and the shade session was
entered. He stated it was important to hold this discussion. He noted the attorney needed a roadmap.
Mr. Woods explained the lawsuit was attempting to declare the transfer invalid, so Taylor Morrison
would still hold the title to the preserves. He stated if this were accomplished, the $3 million would
become irrelevant. He noted whatever amount the Board indicated it wished to receive through the
lawsuit was irrelevant as he was required to have an expert opine as to the cost of the remediation and
ongoing maintenance expense, and another expert opine as to the calculation of the fund needed to
maintain the preserves. He stated the interest rate used would follow the lines of what the Corps would
typically use. He noted an expert could opine as to the percentages based on the Corps' numbers. He
stated these would happen at trial. He noted in terms of settlement, when there was an actual
settlement offer, then numbers could be negotiated and discussed; however, the opinions of the Board
Members would be irrelevant for the trial. He stated he would try for the highest number possible, but
at the same time you did not want to appear with a number which was too high and lose credibility.
Mr. Miller stated he wanted to discuss filing a second suit for construction defects. He stated in August
of 2018 Taylor Morrison lost a $17.3 million dollar suit to Aqua Lakes Community Association and in
November 2021 Taylor Morrison lost a $35 million dollar suit to Poinciana CDD. He noted Taylor
Morrison had two other lawsuits pending against them. He discussed the motion he made and
withdrew during the last Board Meeting regarding filing a second lawsuit for construction defects.
Mr. Woods stated the judge ruled a separate suit would have to be filed regarding any defective
construction issues.
Mr. Miller stated he felt this should be done sooner rather than later. He noted the Board now had
significant numbers it had to assess to the residents because of Taylor Morrison. He stated while it
would be wonderful to file a joint suit with the HOA for construction defects, he did not want to wait for
the HOA if the HOA were not ready to file. He stated he wanted to have this second suit filed before
entering the courtroom for the first suit. He noted he understood the Board did not have a lot of money
to spare at this time, but he did not feel it would cost much to just file the suit; the time and money
came later with due diligence, discovery, depositions, etc., and this could be deferred until the funds
were available. He asked how the other Board Members felt about this idea.
Mr. Winters stated (indecipherable).
Mr. Woods indicated he could not hear Mr. Winters.
Chairperson Stamp stated Mr. Winters was saying in effect, the Board already authorized a second
lawsuit as it authorized trying to amend the lawsuit to add the claims.
Mr. Woods stated Mr. Miller was correct, a second suit could be filed, and it would not be expensive to
get the filing done;the costs came later. He stated if the Board wished this to be done, he could file the
secondary suit relatively quickly. He stated Counsel's preference was to try and file this suit with the
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HOA as a plaintiff. He noted the HOA was hopeful to be ready to file suit in 6 to 8 weeks; from a
strategic standpoint he would like to be joined with the HOA in the same suit, but this might not occur
for a couple of months or longer; therefore, if the Board wished to proceed with filing the suit this could
be done.
Mr. Kleck stated he felt hearing Taylor Morrison was losing other cases was a good indication the CDD
had a good chance of winning its case as well.
Mr. Bhatla stated he felt authorization to file a construction defect suit had already been given. He
stated before increasing the residents' assessment the CDD needed to show it was taking action and it
needed to show cause for why assessments were being raised. He stated he was watching corporate
Taylor Morrison carefully and watching the Taylor Morrison annual reports. He noted Taylor Morrison
seemed to be underrepresenting its potential environmental liabilities. He stated he felt the SEC would
not be pleased.
Chairperson Stamp discussed reporting rules as related to the SEC.
Mr. Bhatla discussed ESG and the Taylor Morrison Corporation. He noted Taylor Morrison had eight
presidents and the President of Taylor Morrison of Florida may or may not communicate with the
Corporate Office.
Mr. Ron Miller stated he did not know whether the President of the Taylor Morrison Corporation knew
of the lawsuit specifically, but he knew the President of Taylor Morrison in Phoenix was aware of the
situation. He noted he wrote the President of Taylor Morrison in Phoenix a letter a long time ago.
Chairperson Stamp stated he agreed he was given the authority to move forward with filing a second
lawsuit; it was more a judgment regarding tactics and strategy that this was delayed. He noted it was
the advice of Counsel, and he agreed, that it was better to wait and file with the HOA. He noted at some
point it may be necessary to move forward without waiting for the HOA, but he did not feel this was
necessary yet. He stated if the case went to trial in June, and there was an excellent chance the trial
would be postponed,the secondary case could be filed the week before the trial and there was plenty of
time to wait for the HOA to be ready to join the case. He added if the purpose was to show the public
the CDD was trying, the Budget was not going to be adopted until July and the construction defect case
could even be postponed until July. He noted there had been discussion between CDD counsel, HOA
counsel, and the HOA. He stated it was possible, in the next 60 days plus, which would still be before
the June trial date and the July budget public hearing, even if filing a joint case with the HOA fell
through, the CDD could still accomplish its goals.
Mr. Ron Miller suggested not taking any action today but perhaps during the April Board Meeting this
could be considered again, and he might make a motion during the April meeting to file suit no later
than May 31, 2022.
Chairperson Stamp thanked Mr. Woods.
THIRD ORDER OF BUSINESS Consideration of Minutes
February 17,2022—Regular Meeting
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Chairperson Stamp asked if there were any corrections to the Minutes; hearing none, he called for a
motion.
On MOTION made by Mr. Tom Kleck, seconded by Mr. Bart Bhatla,
and with all in favor, the February 17, 2022, Meeting Minutes were
approved as amended.
FOURTH ORDER OF BUSINESS Consideration of Resolution 2022-2
Consideration of Resolution 2022-2, a resolution of the Board of Supervisors of the Flow Way
Community Development District: (i)approving the execution and delivery of two applications to the
South Florida Water Management District requesting a transfer of an existing Water Use Permit from
Taylor Morrison to the District;and (ii) authorizing the District Manager to sign or execute such
additional application documents as are necessary or required in connection with obtaining further
approvals of any modifications to the Water Use Permits
Mr. Ward: This is the authorization to transfer the existing water use permits for the irrigation system
within all of Flow Way from its current ownership, which is Taylor Morrison, to the CDD. We deferred it
for a couple of months. I think Bart was going to go look at some items with respect to that permit along
with Jimmy and they are in concurrence it is time to move forward with transferring those water use
permits over to the CDD.
Mr. Messick agreed it was appropriate for the CDD to maintain and take responsibility for ownership of
the irrigation consumptive use permits.
Mr. Kleck asked about potential expenses as a result of this transfer.
Mr. Bhatla: It is only the fee involved, which is$100.
Mr. Kleck discussed his previous experiences with a different HOA in which the HOA took over
responsibility for the fountains in the neighborhood which ended up being a tremendous expense to
maintain.
Mr. Ward: Yes. There is a substantial expense for the District to get into the business of maintaining the
assets it owns. This irrigation system is one of those assets. We will incur a significant expense as a part
of the 2023 budget for which we will get into all of the costs of that, including the irrigation system,
when we talk about the budget. We do have estimates of that, and if you don't mind, we will do that as
a part of the budget process.
Mr. Winters: Should we know what that number is before we vote to take it over?
Mr. Messick: We have looked at the assets. We do know that one of the reuse pumps is being looked at
today, so we will find out the cost to get that back up and running this week.
Mr. Ward: I want to point out, because Martinn's question is good, we already are maintaining these
assets. All of the assets of the District have come into the CDD basically as of January 1 of this year, so
all of the expenses, the reuse/irrigation system, the storm water system, the lake banks, littoral shelves,
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entranceways, the fountain, roadway, bridge, landscaping, etc., all are in the CDD and being maintained
by us right now. So, this facility is a CDD facility. All we are doing with respect to the permit is just
ensuring that 374 million gallons of irrigation water that's in this community is permitted correctly on a
going forward basis. We can always change the permit. That's clear we can do that. That permit is
integral to, and important to, the integrity of the assets of this entire community and has to go
somewhere, so it has to get out of Taylor Morrison's name and come to the CDD. The cost of the
maintenance, whether the HOA does it or the CDD does it, is not insignificant.
Mr. Winters asked if there were any deferred maintenance or construction defects associated with the
asset.
Mr. Ward: As a part of your budget process, we are going to go through all of the capital elements that
need to be repaired, replaced, etc. I don't really see any major issues with the reuse/irrigation system.
We do obviously have some problems with it at the moment, which are being worked on and repaired,
but we will get into that with the budget process. These are minor at the moment.
Mr. Bhatla: I think it is reasonable to ask our engineer to prepare a brief report indicating the expense
that we are learning about, like an information item, so the Board Members are aware of the cost.
Everything you said was appropriate. It has to come to us. He asked for a report including information
about the ground wells,etc.,the replacement and repair costs, etc.
Mr.Ward indicated this could be done.
Mr. Dave Boguslawski indicated he had information regarding the pump which was inspected.
Mr. Ward asked him to defer this until later in the meeting.
Chairperson Stamp called for a motion.
On MOTION made by Mr. Bart Bhatla, seconded by Mr. Tom Kleck,
and with all in favor, Resolution 2022-2 was adopted, and the Chair
was authorized to sign.
FIFTH ORDER OF BUSINESS Fiscal Year 2023 Budget Plan
Fiscal Year 2023 Budget Plan and Five(5)Year Capital and Asset Evaluations
Mr. Ward: I am required to prepare and present a budget to you on or before June 15th of each year. At
some point during the process, you have to approve it so we can set a public hearing and do the mailed
notice requirements. Conceptually, the process would be that we would start that process today by
reviewing your proposed budget. We will have today, April and your May 19th Meeting for purposes of
review of the budget. At the main meeting you will need to make a decision on,for lack of a better term,
approval. It does not bind you to anything, but it merely allows Staff to proceed forward to your public
hearing. Then in June we will do the mailed notices and at the July meeting you adopt the budget.
Approval lets you move forward, and adoption puts in place the assessment rates and the programs with
respect to your budget. Today, we are going to start that process with you and in preface to actually
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preparing the budget, you had authorized in the latter part of 2021, Calvin Giordano (CGA) to prepare a
number of reports for that outlined the status of the existing assets, values of our existing assets,five
year capital plan for all of those assets, what needs to be done on a short term basis for 2023, and on a
five year basis for the restoration of all those assets, and how to handle that on a going forward basis.
Then one they finish that with you, I will get into the financial impacts of the plans that have been
prepared for you by CGA for all of your assets. We will start with Jimmy with his three reports and when
he's finished, I will summarize that with a review of your proposed 2023 budget. All of the information
and the costs that he has in his reports then fall into your proposed budget for 2023.
I. Calvin,Giordano&Associates—Capital and Asset Reports
a. Capital Improvement Program
b. Asset Replacement Cost Report
c. Stormwater Erosion Report
Mr. Messick discussed his process including investigative work researching various permits. With
regard to the environmental resource permit through South Florida Water Management District,
there were quite a few permits. There was a family of 22 applications that have been submitted to
the District for approval. Originally in 2002 the original PRP was submitted. It's application
000518-10. Since the original permit there have been various permit extensions and compliance
minor mods that were submitted, until 2012 in November, the conceptual approval and
(indecipherable).
Mr. Messick continued to discuss the various permits which were approved and modified over the
years. He indicated he also researched the plats submitted to Collier County which outlined what
parcels and what dedications were required for the HOA, Esplanade Golf and Country Club of
Naples, Inc., Collier County Water and Sewer District, Collier County, Public Utility Easements,
North Collier Fire Control District, and reserves to the developer. He explained this research
allowed him to do an inventory of the assets. He reported assets included the drainage system,
irrigation system, entry feature, entry roadway, and landscaping. He reported the drainage
system consisted of lakes and canal banks, pipes, and structures; the irrigation system was
primarily the pump house, pumps, controls, irrigation mains; the entry feature was the roadway,
landscaping, curbing, striping, signage, marquis sign, and fountain at the entrance along
Immokalee; and the landscaping included the landscape buffers and internal common elements
identified.
Mr. Messick indicated his first report identified what the asset replacement costs were; the total
projected asset replacement costs were estimated at $12.2 million dollars. He noted these
numbers should be updated annually to account for construction and District changes due to
inflation, labor rates, material availability, taxes, and insurance. He noted the purpose of this
report was to provide the CDD with asset replacement construction costs in order to establish a
capital reserve program. He discussed the irrigation pump house and system; the pump station
located northeast was well landscaped and the overall irrigation reuse system used surface lakes
for withdrawal for irrigation systems through the community. (Indecipherable). He reported the
Hatcher parcel had a separate system which had its own pump station,valve, motor with electrical
and filter, and included its own mains. He discussed the stormwater drainage system which
included the control structures, weirs, culverts, drainage structures, littorals, pipes, etc. He
discussed the next asset, the entry feature, which included paver brick roadway, curb and gutter,
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pavement markings, signage, marquis sign and entrance water fountain. He stated lastly was the
landscaping and a map was included which identified the landscaping areas. He discussed the
various landscaping buffers. He stated the report also included pictures of the various assets.
Mr. Messick reported in order to develop an accurate 5-year Capital Improvement Plan (CIP), all
the permit conditions were taken into consideration. He discussed the condition of the lake banks
noting the easements and slopes in the community had deteriorated and been compromised by
weather and wave erosion, as well as installation of downspout yard drains. He noted rip rap was
installed to help with erosion, but he recommended not allowing any future installation of
downspout yard drains. He stated the homes, or the affiliated association, would be responsible
for rectifying these downspout conditions prior to lake bank restoration. He discussed the footage
per lake which would require corrective action or reconstruction, explained the materials required
for lake restoration, and the fiscal impact of providing these improvements. He noted the permit
held the CDD responsible for correcting erosion. He discussed lake bank erosion restoration
options and costs. He noted dredging or recovering the fill which had been eroded, and re-
grading the lake banks, particularly into Geotubes, was the recommended option as it was the
least intrusive and disruptive to residents and cost $49.50 per foot, totaling $618,629 dollars. He
stated these numbers were also included in the Capital Improvement Plan based on the lake
erosion evaluations and ratings identified; rating was from 1 through 5, with 5 being worst with
over 30 inches of lake bank restoration necessary to meet permit conditions. He stated GIS
prepared maps for review. He noted there were tables which identified necessary lake bank
restoration and costs per lake. He stated the cost for littorals were also included in the CIP.
Mr. Messick stated the last item prepared was a Capital Improvement Program which was a "cliff
notes" of all the CIP projects. (Indecipherable). He read the executive summary: "The Capital
Improvement Program establishes, prioritizes, and plans funding for programs to improve existing
infrastructures and facilities. CIP promotes better use for the CDDs limited financial resources,
reduces costs, and assists in coordination of community asset maintenance. The CDD's CIP is a
five year program which identifies the major expenses over and above routine annual operating
expenses. While the CIP serves as a long-range plan, it is reviewed and revised annually. Priorities
may be changed due to funding opportunities or circumstances that cause more rapid
deterioration of the community's asset." He indicated the Capital Improvement Program included
the capital improvements proposed in the budget for Fiscal Year 2023 through Fiscal Year 2027.
He discussed the different sections of the Capital Improvement Plan including stormwater
management services, erosion restoration, drainage pipes, internal and external preserves,
irrigation pump station and community (indecipherable). He noted the Program outline included
who,what,where, when, and why for each project.
Mr. Kleck asked when his lake would be fixed. He noted the report indicated it would only cost
$1,485 dollars to fix his lake.
Mr. Messick responded his lake was projected to be fixed in 2027 as it was a small lake with little
erosion.
Mr. Kleck asked what the$1,485 dollars would fix.
Mr. Messick responded the slope of the bank would be restored to permit requirements.
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Discussion ensued regarding the reports presented by Mr. Messick; a previous estimate of
$500,000 dollars to bring littoral plantings up to permit requirements; and the investigation of
lake bank littorals revealing there were no littoral areas missing; all littoral plantings were up to
and exceeding permit requirements.
Mr. Messick indicated the CIP included lake bank erosion restorations, littoral plantings, drainage
pipes and structures. He explained the immediate actions needed in pipes and structures were
identified, as well as lake bank restoration.
Discussion ensued regarding littoral plantings, permit requirements for littoral plantings; and the
lake maps including permitted littoral plantings.
Mr. Messick noted not all lake banks were required to have littoral plantings.
Mr. Kleck noted the Audubon Golf Course, which was also a Troon property, and the lakes at the
Audubon were gorgeous. He discussed the flowering littorals around the lake and the clear water.
He asked if anyone had contacted the Audubon regarding how it was maintaining its lakes. He
stated he felt whatever plan the Audubon followed was clearly working very well.
Mr. Messick responded he had not communicated with Audubon.
Mr. Kleck asked if it would be possible to communicate with Audubon.
Mr. Messick responded in the negative.
An unidentified member of the audience stated: You have to keep in mind too, the developer
giving you a starting point of what they were required to do, so maybe they have gone and done
further enhancements on top of that. What we've found is that the plants are all where they are
supposed to be and there are additional plants around portions of the lake in addition that have
either volunteered or were over planted. They are also all the same plant more or less, 80%to 90%
of the littoral plants are spikerush and cordgrass. He noted there were some littoral plants which
did flower in some of Flow Way's lakes, but this was not widespread, while Audubon may have
had mostly flowering littorals permitted and planted.
Mr. Ron Miller made comments in regard to other communities using creeks to control the water
levels in the lakes.
Mr. Messick: You see, with storm water setups that are setup with positive inflow and a discharge,
you will get the clearer water, it will pass through to make it a little bit cleaner. In this case the
Flow Way canal on the outside is what's leading water from the preserves to the north to the
Cocohatchee canal on Immokalee and we don't reap the benefits of that fresh water coming in.
The Flow Way is not feeding our lakes, but it is connected. We have overflow control structures
that discharge to the canal. Typically, you are going to see water leaving, not water coming in.
Mr. Winters: This is a 5 year plan, and I assume there are assets whose lives last longer than 5
years. My question is,for those long-lived assets, are we establishing preserves, or should we be
establishing preserves, to replace some of these more expensive items that are going to fail in year
6 or 10?
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Mr. Ward: In my perfect world the answer is absolutely we should be doing that. But we are
operating on a cash basis.
Mr. Winters: Is it worth setting up a contingency(indecipherable)?
Mr. Ward: I don't think it's large enough to really need it. If we did it, in a project this size, it's
going to be a $150,000 dollar a year addition to your budget for that kind of a reserve. I don't
think we need it right now. I think in three years we could take a look at that.
Chairperson Stamp: Part of it will be how the lawsuits come out.
Discussion ensued regarding the necessity of setting up a reserve account; and revisiting the
reserve account in a few years.
Mr. Ron Miller asked a question to Jimmy Messick and made some comments regarding
assessments on the residents increasing, while looking at a 5-year plan that instead of killing
everyone on year one, looking at options of moving items from the budget by priority.
Mr. Messick: The priority level is based on how much erosion the lakes have, so lakes 12, 20 and
21 were put in front of lakes 7 and 8 because they have more erosion to them, but certainly the
Board, if you want us to move one in front of the others, the work could be done. (Indecipherable)
could make the case to let them do the improvements and they will come in and finish the lake
bank restoration after they're done, whether that's in 2024 or we can push it back to 2025. We
have the time to decide that. This discussion is good because that wasn't considered in our—
Mr. Miller: Or we can leave things just the way they are, and make those decisions at that time?
Mr. Ward: The answer is yes. We can do that. If you look in the 2023 capital program, we do
keep a contingency. I'm keeping a contingency item within the erosion restoration, so there is a
$10,000-dollar contingency item in here, plus what we don't know right now is whether lake 11
and lake 21 are going to be at those total numbers. They might be under; they might be over. So,
we have some leeway. It's not going to be October, November, December, January leeway, but
maybe by March or April next year we will have a better understanding of whether we can actually
say yes to moving it, but conceptually we can make those kinds of changes on a going forward
basis. It's just something we should look at maybe after the winter.
Mr. Messick: It's worth mentioning that we will put out an RFP for contractors to bid on for all five
years, so we will that will hold those pricing down they will have to stay to those prices for that
period and see those prices now.
Mr. Miller: I just wanted to make sure that we have the opportunity to cooperate in the
(Indecipherable).
Chairperson Stamp: We have pretty good transferability between lines. We can pretty much move
stuff around, but we have to have a good rationale for doing it.
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Mr. Bhatla: I got the impression that the lakes and littorals we got from the developer were in
good shape, in other words they complied with the permit requirements.
Mr. Messick:yes.
Mr. Bhatla: So essentially the capital improvement program, operations, and maintenance, is not
including(indecipherable).
Mr. Messick:yes.
Mr. Bhatla: So, all this information would also provide us information about what we might have
had as deficiencies at the time of the turnover. We need these starting points.
II. Proposed Budget—Fiscal Year 2023
Mr. Ward: I'm going to start on page 1. Pages 1 through 4 are the meat of your operations budgets.
One of the most important elements of this budget is how much cash we will have at the end of the
existing fiscal year that will carry us through December 31 when we begin to receive a lot of the
assessment revenue from the project. Our estimate is that we will only have about$90,000 dollars
left by the end of this fiscal year that will let us pay bills October, November, and December. What
I've calculated here is a way to get that cash level up to roughly$350,000 dollars to$400,000 dollars
by the end of 2026,so we will then have enough money to carry our budget. I have included$91,000
dollars in this year's budget. You'll see it as a negative number in the far right column. A negative
number in a government in this line item is really money coming in. That's money that will come in,
in 2023, 2024, 2025, and then going into 2026 we will have enough money to basically operate the
district on the first three months. I've spread that pain out over a three-year period, for lack of a
better term, in order to try to meet these requirements. In actuality, the number is roughly 2.7
months of your current year operating budget. The 2.7 comes in because these days we tend to get
money around the 18`n 20tn 215; 22"d of December just due to the way the appraisers and the
collectors send us money on an ongoing basis.
Mr. Ward: This budget is broken down by department. Departments are just the segments of the
way in which we will operate the District. The first section is all of the administrative costs of the
District which we have had in this budget from the beginning of this District. In the current year we
are in, it's a $306,000 dollar a year operation. In 2023, that is a $350,000 dollar a year operation.
Really, the only change to it from budget year to budget year is legal fees and a little increase in
insurance projected for 2023. Obviously that number can go up or down simply as a result of the
legal fees. The remaining items in here are relatively static items that stay consistent from year to
year with some minor changes based on contract changes that we have on a year-to-year basis.
Your engineering fees are the second part of this administrative piece. In the current year we are in,
your budget is $25,000 dollars. I've increased it to $55,000 dollars for 2023. We have a significant
cost in the current year we are in simply to get all of the kinds of reports we've developed with Calvin
Giordano in the current year necessary to operate this District beginning in 2023-2024, etc. We go to
the next part. Your stormwater management system is broken down into essentially two parts. One
part is your favorite part of this entire budget which is the external preserve maintenance item. The
budget has traditionally been roughly$260,000 dollars a year. It's basically the same as what it was
in 2023, except for $55,000 dollars that are coming into the budget from some capital
improvements, and if you look on the capital plan, that is simply the fencing for the external
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preserves that's been scheduled in over the five-year period. The next part of your storm water is the
lakes, the lake banks, the littoral shelves, the capital associated with that, and how we are going to
operate that in fiscal year 2023. Interestingly enough, our 2022 budget has that number at roughly
$81,600 dollars for the current year. Those are the numbers that we had been consistently carrying
for a couple of years in our budget. Now that this is the first year of pay operations and the first year
that we have really had an opportunity to evaluate what it really costs to maintain the system, that
number needs to go up to $476,000 dollars for fiscal year 2023, and that includes the capital
elements that I will get to in a few moments and that Jimmy has mentioned on an ongoing basis in
order to maintain the system. I'm not going to tell you that's the Audubon's scale of operations,
because I don't know that obviously, but it will get us to an operational base that I think is
substantively more reflective of a community that's built out and that we need to have on a year-to-
year basis going forward. You will see improvements from what we have now. The next part of this
budget and the other part of the program is the community wide irrigation system. The irrigation
permits, as Jimmy referenced, were permitted at 374 million gallons a year of irrigation water for
this entire community. It sounds like a lot of water but for a community of this size it's pretty
normal. It included the pump station, the pumps, and wells with the station, etc. In the past, it was
estimated at$35,000 dollars. The real number is roughly$125,000 dollars a year in order to operate
and maintain that system including a few minor capital elements that go with it. Then another big
piece is the landscaping systems and those assets at the front entranceway. They include your
fountains, pavers, the bridge which surprised me. It's a private bridge, not maintained by Collier
County. It's a bridge specifically for Esplanade, so it's got to be insured, it's got to be operated and
maintained correctly. That budget is $268,000 dollars for fiscal year 2023. In our old budgets we
had roughly$45,000 dollars, obviously not even close to what it's going to require to maintain that
bridge. So, your overall operating budget is$1,653,000 dollars for fiscal year 2023, plus the$92,000
dollars to try to move some of the cash balance up, so your total assessment is going to be roughly
$1,744,000 dollars for fiscal year 2023. What does that mean? It means our existing assessment is
$525.04 dollars per unit. Our projected assessment for fiscal year 2023 is $1,473.28 dollars.
Although it is a pretty significant number in terms of the change, what we tried to do in terms of this
budget was make that number sustainable for five years. Basically$1,500 dollars a year is what we
think we will need, but maybe with some minor increases or decreases, most of that I think will be
more litigatory in nature in terms of increases, and if we have any other unexpected expenses, it may
have an impact on that number.
Mr. Bhatla: Certain systems have been moved from HOA to CDD, so essentially the cost it isn't going
up because we were spending it already.
Mr. Ward: What's in the existing anticipated columns we pulled over basically from the HOA. But
then we did do an external separate evaluation of the cost it would take us to do that, including the
capital costs, which is a significant portion of this entire budget process.
Chairperson Stamp: But there is a difference. When the HOA was under developer control, they
didn't do the maintenance. We are building in numbers for maintenance that they didn't.
Mr. Bhatla: In other words, the irrigation system was being operated by HOA, now we are just
taking it over, so we are increasing our costs, and the HOA is decreasing their costs. Would there be
a net number?
Mr. Ward: No this is not a net number.
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Mr. Miller: I think what he's saying is that there isn't additional money for the residents, it's just that
if the Taylor Morrison HOA was to do this, but they didn't and that's why we are suing them.
Mr. Ward: Right. That's what I'm saying.
Mr. Bhatla: So, it's all an additional amount.
Mr. Ward: A lot of it is. The one thing we, as a government, cannot do — I don't make
representations that an HOA number should go down by what we are doing. We independently
looked at this entire system, and at what the existing HOA is doing, and what was being done by
Taylor Morrison, and we came up with an independent analysis of that. That's what all of Jimmy's
reports do for us, come up with the real cost of maintaining the system. Whether the HOA does it or
we do it, this is the number. This is what it's going to take to run this program for this year,for this
coming year and for the four years thereafter, on a reasonable basis for this community. As Ron was
trying to say, the numbers we had in our budget were old Taylor Morrison HOA budget numbers.
They were just not right. They were too low. They never were right. So, the $1,473.28 is the
assessment rate proposed for 2023. The other number that's important is what we call the cap rate.
That's the rate that we establish where we don't have to do mailed notice every year to the
community. This year we are going to send out 1,183 notices to the community. The cap number is
$1,767.94. That means as long as we don't go over that assessment rate for the next however many
years, then we will not need to do mailed notice if we stay within the constraints of this budget.
Along with the capital program element for the next five years, and what we anticipate may be some
changes, either increases or decreases going forward for operations, I'm confident we should be able
to stay within the$1,700 dollar number.
Mr. Winters: What's the importance of not having to send mailed notice.
Mr. Ward: It's more just doing it. It's a $5,000 dollar expenditure for us to go through that entire
process.
Mr. Bhatla: These costs include the maintenance of the preserves?
Mr. Ward: Yes.
Mr. Bhatla: Which of course is very much a subject of discussion. Why this should be included?
Mr. Kleck: The perimeter fencing issues, do we have monies in there for that?
Mr. Ward: Yes, we have phased those in over a 2-to-3-year period to handle the fencing.
Mr. Miller made comments which were (indecipherable).
Chairperson Stamp: Jim and I worked to put this together and the thought is, some of these numbers
are probably high, but it is my intent to let all of the Board Members go through this line by line at a
meeting and say, I want to increase or decrease this line, and we can come to a consensus and vote
on it. We can do that. We can shape it. These are the parameters of what would implement the
plan with the obligations as they exist today. Maybe not as they exist after the court case or down
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the road, but that's the framework we wanted to put together. It's an attempt to capture
everything. Keep in mind that it is easier to reduce than it is to add. In fact, we get to a point legally
where we can't add.
Mr. Kleck: That being said, these numbers probably won't get any worse than what they are now in
this report.
Mr. Ward: In terms of if you want to add something, the answer is no. My intent and Jimmy's intent
was to make it something that is sustainable for us for a 5 year period.
Mr. Miller:I think it's good that we know the actual operating cost as this budget presents it, but still
think we could remove some funding to preserves.
Mr. Ward: One thing I think it's important to remember, the adoption of the budget doesn't commit
you to spending it exactly the way it's here. So, even though I have,for example, the budget for the
preserves, what they are, that decision —personally I think leaving it in is a good idea just because
we need to sustain the assessment level. It doesn't mean we have to do it.
Mr. Miller: but if we approve it, we have to assess it and don't have to spend it, what I'm suggesting
is that we reduce the amount so that when we do the assessments that amount isn't included in the
assessments.
Mr. Winters: I know you've beat this to death in prior meetings, but it's worth rehashing again,
responding to Ron's point, are we liable to the Army Corps of Engineers for not maintaining it if we
don't? Is that a legal question?
Chairperson Stamp: That's a legal question and I'm not a lawyer anymore. The simple answer is we
don't know if we don't do it if they are going to go after Taylor Morrison or us. We can speculate
and argue either side of that, but until it happens, we don't know.
Mr. Winters: I guess the next question is, has our counsel been in contact with Corps, and if so, have
they offered any hope that they are going to step in and do anything or are they just waiting for
Taylor Morrison to reach maintenance phase before they come back to finalize the permit.
Chairperson Stamp: The Corps has offered no guidance. There has not been any contact in quite a
while. We've gotten no feedback from the Corps about anything. I guess the nature of government
bureaucracy is, and I used to be part of one, is to wait for someone else to make the decision. That
may be unfair to the Corps, but they know about all this; they have been advised but they are just
not responsive.
Mr. Winters: So, is it fair to say that their current posture is that they are going to wait for Taylor
Morrison to get through the mitigation phase before they have to sign off on?
Chairperson Stamp: I'm not sure they are going to do anything even then.
Discussion ensued regarding the Corps; most of this discussion was (indecipherable).
Mr. Miller: Jim, do we have the opportunity to get that stuff that to the(indecipherable)?
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Mr. Ward: Yes.
Mr. Miller: Then I would suggest at least for the purposes of this meeting, that the Board consider
eliminating the preserve maintenance, continuing to maintain the internal preserves plus$10,000 for
additional preserves and let the chips fall where they may and we will take care of emergency when
they happen.
Chairperson Stamp: Remember Barbara Kininmonth indicated that the 1 and 3 preserves were done,
and that they were spending literally hundreds of thousands of dollars on the preserves in the north
end. So, it's not like they are being ignored if you believe what she said under oath. Again, we've got
two more months. We could do it next month or the month after, or we could actually reduce the
budget at the July hearing if we want to do that.
Mr. Bhatla: Is the preserve an independent piece of property with its own title, or is that wrapped up
in the community?
Chairperson Stamp: There are separate specific deeds for that property that are not part of the
Esplanade development.
Mr. Bhatla: Then the question would be how could the CDD accept that because this is an
independent free standing property?
Chairperson Stamp: That was done by a Board controlled by Taylor Morrison. That is part of the
lawsuit, that they violated their fiduciary duty when they accepted those parcels with essentially no
debate at all. That is in essence the lawsuit against the directors; they should not have accepted it.
And if there are any other items people want to make motions on, either up or down, we can't
communicate with each other, but you could let Jim know as that would be helpful in facilitating
what we are going to do. Also, if we do fully fund the preserves as recommended and we don't
spend it, we are just adding to our contingency expenses down the road.
Mr. Miller:(Indecipherable).
Mr. Winters: Does that legal fee line item include the anticipated cost of the second lawsuit?
Chairperson Stamp: No.
Mr. Winters: Should we put an additional$50,000 dollars in there?
Chairperson Stamp: We can do that. (Indecipherable). Keep in mind if we go to trial in June, which
again is not likely, given the way they do it. They schedule a bunch of cases on the same days,
knowing some will settle before trial, and you don't know if the line will get to you or not. But
assuming we win everything, there is going to be an appeal, and it's going to drag out. We are not
going to walk out of the courtroom with a check or anything, but after the trial our legal fees should
be substantially reduced as trial time is very expensive.
Mr. Winters: I just think it would be a good idea to earmark funds for the second lawsuit.
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Chairperson Stamp: That's reasonable.
III. Consideration of Resolution 2022-3, a resolution of the Board of Supervisors of the Flow Way
Community Development District approving the Proposed Budget for Fiscal Year 2023
Chairperson Stamp indicated Resolution 2022-3 would be held until July 2022 when the Budget
would be adopted.
SIXTH ORDER OF BUSINESS Supervisor's Request
Mr. Ron Miller - Discussion of additional Taylor Morrison lawsuit for construction defects and
deferred maintenance
This Item was discussed during the Second Order of Business—Public Comments portion of the meeting.
SEVENTH ORDER OF BUSNESS Staff Items
I. District Attorney—Woods,Weidenmiller, Michetti, &Rudnick
a. Status Report on Litigation
b. Non-Binding new Arbitration Hearing date—April 26,2022
c. Update on discussions with HOA as to potential new litigation
These Items were discussed during the Second Order of Business — Public Comments portion of
the meeting.
II. District Engineer-Calvin,Giordano&Associates
a. Preserve Tree Removal
b. Strategic Operational Plan
c. SFWMD Water Use Permit Transfer
d. Preserve Area Fire
e. 20-year Stormwater Needs Analysis
Mr. Messick indicated these items were covered previously and he did not have anything
additional to add.
Mr. Bhatla: We are still pumping at normal? How much is it?
Mr. Messick: Yes. I believe that one pump is pumping full and the other pump they are looking at.
Mr. Ward indicated he would provide an update about the pump during his report.
III. District Manager—JPWard&Associates, LLC
a. Manager's Report February 2022
b. Financial Statements for period ending February 28,2022(unaudited)
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Mr. Ward: There are two wells that supply irrigation water to the community along with a lake
which is where the water is flowed into. Those two wells house two pumps. One of the wells and
the pumps is working just fine. The second well and pump are flowing at very low volumes. The
pump and the motor have been pulled. The well casing itself is going to have to be inspected. It
looks like there could be some damage to the well casing itself and I have no clue what that's going
to cost, but we will know that as soon as we get it done. The main issue, it looks like the pump is
shot, but the motor is in good shape, so the pump will go back to the shop for either repair or
replacement more than likely, and then the casing needs to be looked at before either of those go
back in the system. That one will be offline. I don't have a time since this well and pump were just
pulled while we were having this meeting. As soon as I have more information, I will advise you at
your next meeting or sooner if it becomes egregious.
Mr. 2:10:57: Do we have adequate water?
Mr. Ward: For the moment I think (indecipherable). I think the lakes are low because we are not
pumping as much as we really need to pump. The community is getting enough water, but it does
need to be fixed soon.
Mr. Keck: The discrepancy we are finding now, is that due to a lack of maintenance on Taylor
Morrison's part?
Mr. Ward: The pump and the motor are 30 feet down, so there is no maintenance to do on them
unless they break. It broke. And it just broke two weeks ago. So, I can't say it's — this could
happen to us 2 or 3 years from now. They should last a long time, but this one didn't. If it's been in
the ground since 2013, it's 2022, so it's been the ground a while.
Mr. Bhatla: I hope it's the pump only.
Mr. Ward: Me too. I hope it's not the well casing.
Chairperson Stamp: We also have the issue of is there a pump available, what with the supply
chain.
Mr. Ward: If a new one is not available, we will refurbish it for now and order a new one, but the
well casing is the most important thing.
Discussion ensued regarding the pump and well casing; and the importance of being able to pump
sufficient water.
EIGHTH ORDER OF BUSINESS Audience Comments
Audience Comments: Public comment period is for items NOT listed on the Agenda, comments are
limited to three (3) minutes per person, assignment of speaking time is not permitted, however the
Presiding Officer may extend or reduce the time for the public comment period consistent with
Section 286.0114, Florida Statutes
Chairperson Stamp asked if there were any additional comments or questions from the Board Members
or audience members.
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Mr. Boguslawski: A lot of good thinking going on in this meeting. I am very impressed with you guys and
the work you did putting the budget together, putting the initial numbers together. If I were in your
shoes thinking about a budget, I'd ask where the numbers could go down and where they could go up.
You were sort of doing that. One of the big areas where you will see some shifting is from the HOA to the
CDD and we've got to do that. It's a big unknown to me too, but obviously as we think about budgets,
we are very interested in the irrigation system. We are very interested in that front bridge. So, some of
your bigger costs, there are things that as we do the tear might come from you back to us. We have a
different year than you do timing wise. Ron, I don't think you were here when Jim Hadder spoke. He
covered the aqua range a little bit, but the near term thing, (indecipherable) keep the golf balls within
the aqua range. I really think the aqua range stuff is an earlier thing, not a later thing. We are going to
try and make it happen. I don't know if we will be successful. Jimmy, you said something about
downspouts spilling on the ground and having to be fixed before erosion is addressed?
Mr. Messick: Yes.
Mr. Boguslawski: If there is a need for us to do something on the HOA side just get a hold of me and we
will connect you with the right people. That sounded to me like something we've got to get a hold on.
Mr. Messick: The downspouts from the house to the lake were not permitted and (indecipherable)
recommend it get fixed or you are going to have the same problem again.
Mr. Boguslawski: Part of your answer is a straight shift. Taylor Morrison was subsidizing the lots, every
year the subsidies drop, but we are still finding things that they didn't do. Some of it was the removal of
the Taylor Morrison subsidies. They used to put flowers all over the place to make it look nice coming in
and they paid for that entirely so that they could sell houses. The last issue is, on the failed pumps, I
think the situation is a little bit worse than Jim said. Neither pump is working. When the first one came
out, they shook it and it apparently started working. The first pump was down for quite a while. The
second pump did not appear to be working. It turns out that the simple test (indecipherable) pulled 30
gallons of water in a minute for a pump that was supposed to be pumping 3 to 5 gallons per minute, so
that pump obviously had a problem. The field report that I got before I came in here is that pumps are
available at$20,000 dollars per pump. I didn't hear about the pump versus—I didn't hear the split that
you heard. I heard that the field guy thought that might have been (indecipherable). There are
questions about how deep the well is. I clearly heard that the well may need to be not only inspected,
but redrilled. So, there are going to be some costs there. That is, to me, a priority item. Then there are
some downstream things about whether there was a defect in construction. There are some things
associated with that, based on what the inspections find. We are finding lots of things that are failing at
year (indecipherable). That tends to be due to the quality of materials or quality of assets that the
developer did.
Discussion ensued regarding whether the pump issues could be a result of a construction defect.
Chairperson Stamp asked if there were any additional comments or questions;there were none.
NINTH ORDER OF BUSINESS Announcement of Next Meeting
Announcement of Next Meeting—April 21,2022
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TENTH ORDER OF BUSINESS Adjournment
Chairperson Stamp adjourned the meeting at approximately 3:30 p.m.
On MOTION made by Mr. Tom Kleck, seconded by Mr. Martinn
Winters,and with all in favor,the Meeting was adjourned.
Flow Way Comm it elopment District
ye/647/
James .Ward,Secretary Zack Stam.,' ha n
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